INCOME TAX REGULATORY UPDATES
Gold and Silver rates as on March 31, 2022
Editorial Note : The Gold and Silver rates as on March 31, 2022 are out. The rate of gold (995 standard 24 carats) is Rs. 51,278 per 10 grams and gold (999 standard 24 carats) is Rs. 51,484 per 10 grams and rate of Silver (999) is Rs. 66,990 per 1 Kg.
NOTIFICATION NO. 25/2022, DATED 04-04-2022
CBDT notifies ‘Canada’, ‘United Kingdom of Great Britain & North- ern Ireland’ and ‘USA’ as notified countries for Sec. 89A
Editorial Note : Section 89A provides relief from taxation on income from a ‘retirement benefit account’ maintained in a notified country. The CBDT has notified ‘Canada’, ‘United Kingdom of Great Britain & Northern Ireland’ and ‘United States of America’ as notified countries for said Section.
NOTIFICATION NO. S.O. 1642(E)
AND G.S.R 274(E), DATED 05-04-2022
CBDT constitutes Dispute Resolu- tion Committee; notifies e-Dispute Resolution Scheme, 2022
Editorial Note : The Finance Act, 2021 has inserted Section 245MA to provide for the constitution of ‘Dispute Resolution Committee’ (DRC). DRC will provide an opportu- nity for the resolution of a dispute arising from any variation in the ‘Specified Order’ and fulfils the ‘Specified Conditions’. The CBDT has constituted DRC and also notified e-Dispute Resolution Scheme, 2022 to dispose of application facelessly.
NOTIFICATION NO. 28/2022, DATED 06-04-2022
CBDT amends Rules to allow Infra- structure Debt Fund to issue ‘Zero Coupon Bonds’
Editorial Note : Rule 2F of the Income-tax Rules allows the Infrastructure Debt Fund to issue
‘Zero-Coupon Bonds’. The conse- quential amendment has also been brought in Rule 8B, which provides guidelines for notification of zero-coupon bond.
NOTIFICATION NO. 30/2022, DATED 11-04-2022
CBDT notifies ‘‘Rajasthan Electrici- ty Regulatory Commission’ for exemption under section 10(46) Editorial Note : The Central Board of Direct Taxes (CBDT) has notified ‘Rajasthan Electricity Regu- latory Commission’ a Commission constituted by the State Govern- ment of Rajasthan for the purposes of the clause (46) of section 10 of the Income-tax Act, 1961. Petition filing fees, licence fees and interest earned on investment of RERC shall be eligible exemption.
NOTIFICATION NO. 29/2022, DATED 11-04-2022
CBDT notifies ‘The Somnath
Temple managed by Shree Som-
nath Trust’ for Sec. 80G deduction
Editorial Note : The CBDT has
notified ‘The Somnath Temple
managed by Shree Somnath Trust
(PAN: AAATS9555Q) as a place of
historic importance and a place of
public worship of renown for the
purposes of the section 80G.
CIRCULAR NO. WSU/6(1)2019/INCOMETAX- /PART-1(E-33306), DATED 06-04-2022
EPFO releases circular clarifying computation of interest on PF
contributions exceeding prescribed limit Editorial Note : The Employee Provi- dent Fund Organization (EPFO) has released a circular clarifying the compu- tation of taxable and non-taxable portions of interest on PF contributions made by the subscriber. The guidelines have been issued considering the CBDT notification GSR 604(E), dated 31-09-2021.
NOTIFICATION NO. 37/2022/F.NO. 370142/01/2020-TPL(PART1), DATED 21-04-2022
CBDT made return filing mandatory where turnover, TDS/TCS or deposit in saving bank account exceeds certain limit EditorialNote:TheCBDThasnotified additional conditions under the seventh proviso to section 139(1) whereby return filing is made mandatory in case turnover from business or gross receipt from profession exceeds Rs. 60 lakh or Rs. 10 lakh, respectively. Further, return filing shall be mandatory if the amount of tax deducted and collected in case of a person exceeds Rs. 25,000 or deposit in saving bank account(s) is Rs. 50 lakh or more.
NOTIFICATION NO. 42/2022/ F. NO. 370142/10/2022-TPL, DATED 22-04-2022
Payment system providers entitled to Sec. 11 exemption can invest in ‘Open Network for Digital Commerce Ltd.’ Editorial Note : A new clause (vb) is inserted under Rule 17C of the Income-tax Rules, 1962 to make the investment by authorized payment service providers in the equity share capital or bonds or deben- tures of ‘Open Network for Digital Commerce Ltd.’, as a permissible mode of investment for exemption under section 11 of the Income-tax Act
NOTIFICATION NO. 46/2022, DATED 27-04-2022
CBDT notifies countries in which ‘Original Fund’ should be resident to claim Sec. 47 (viiac)/(viiad) exemption
Editorial Note : The Central Board of Direct Taxes (CBDT) has notified countries and specified territories in which the ‘Original Fund’ should be resident to claim exemption provided by Sections 47(viiac) and 47
(viiad).
NOTIFICATION NO. 48/2022/F.NO. 370142/18/2022-TPL(PART-1), DATED 29-04-2022
CBDT notifies Form ITR-U for filing of updated return
Editorial Note : The Finance Act, 2022 has introduced a new concept of updated return, wherein it allows up to 24 months to file the return of income. The CBDT has notified a new Rule 12AC and new Form ITR-U for filing of such updated return of income.
CBDT notifies ITR forms for FY 2021-22
|
ITR Form |
Who can file |
Who cannot file |
|
ITR-1 Sahaj |
Resident individuals (ordinarily residents – ROR) having:
|
An individual who is either source (TDS) u/s 194N (cash payments > Rs. 1 crore by banking company / co- operative society), or • If income-tax is deferred on Employee Stock Ownership Plan (ESOP) |
|
ITR 2 |
Individuals and Hindu Undivided Families (HUFs) not having income from business or profession |
– |
|
ITR 3 |
Individuals and HUFs having income from business or profession |
– |
|
ITR 4 Sugam |
Resident individuals / HUFs / firms (except limited liability partnerships) having total annual income ≤ Rs. 50 Lakh computed u/s 44AD, 44ADA, 44AE of the Act relating to presumptive taxation; |
An individual who is either |
|
ITR 5 |
Persons other than individual, HUF, companyorpersonfiling ITR 7 |
– |
|
ITR 6 |
Companies, other than companies claiming exemption u/s 11 |
– |
|
ITR 7 |
Persons (including companies) required to furnish return u/s 139(4A) or 139(4B) or 139(4C) or 139(4D) only |
– |
RECENT JUDICIAL RULINGS ON INCOME TAX
SECTION 2(9) OF THE PROHIBI- TION OF BENAMI PROPERTY TRANSACTIONS ACT, 1988 – BENAMI TRANSACTION
Definition of ‘benami transaction’ in sec 2(9) of PBPT Act has no retro- spective applicability to transac- tions entered into prior to 1-11-2016 – Nexus Feeds Ltd. v. Assistant Commissioner of Income-tax – [2022] 137 taxmann.com 494 (Telangana)
SECTION 10(23C) OF THE INCOME-TAX ACT, 1961 – HOSPITALS
Philanthropic purposes : Where assessee trust was running a medi- cal dispensary wherein it was providing free medical treatment to patients and annual income of assessee trust was out of interest income from investment which had been made of surplus lying with it and there being no allegation that assessee trust was involved in any activity for profit or did not exist for philanthropic purposes, assessee Trust was within its rights to accu- mulate receipts as per its require- ment and thus, would be eligible for exemption under section 10(23C)(iiiae) even though it had incurred only 12 per cent of receipts for philanthropic purposes and accumulated 88 per cent of its receipts – Swasthya Sewa Sans- than v. Commissioner of Income-tax (Exemption) – [2022]
137 taxmann.com 311 (Kolkata – Trib.)
SECTION 32 OF THE PROHIBITION OF BENAMI PROPERTY TRANSAC- TIONS ACT, 1988 – QUALIFICA- TIONS FOR APPOINTMENT OF CHAIRPERSON AND MEMBERS OF APPELLATE TRIBUNAL
Madras HC strikes down as unconstitu- tional the provisions of sec 32(2)(a) of PBPT Act regarding qualifications of Judicial Member of Appellate Tribunal – V. Vasanthakumar v. Union of India – [2022] 137 taxmann.com 495 (Madras) SECTION 54 OF THE INCOME-TAX ACT, 1961 – CAPITAL GAIN – PROFIT ON SALE OF PROPERTY USED FOR RESIDENCE
General : Section 54 cannot be confined only to a residential house and cannot be interpreted to mean that it has no application to land appurtenant to a residential building – Charu Agarwal v. Deputy Commissioner of Income-tax, (International Taxation) – [2022] 137 taxmann.com 283 (Delhi – Trib.)
SECTION 92C OF THE INCOME-TAX ACT, 1961 – TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
Adjustments – Guarantee commission : Where assessee had provided corpo- rate guarantee to a bank, on strength of which, bank had provided funds to its wholly owned subsidiary and Tribunal in earlier year on similar facts directed Assessing Officer/TPO to compute corporate guarantee at rate of 0.5 per cent, ALP of corporate guarantee would be computed at rate of 0.5 per cent of guarantee value – Teleperformance Global Services (P.) Ltd. v. Assis- tant Commissioner of Income-tax – [2022] 137 taxmann.com 310 (Mum- bai – Trib.)
Adjustments – Guarantee commission : Where provision of performance guarantee by asses- see to third party on behalf of its AE had benefitted assessee itself since actual service to be provided to third party was outsourced to asses- see by its AE and entire compensa- tion received from customer came back to assessee and TPO simply followed adjustment made in earlier years, issue of determination of ALP for provision of performance guarantee was restored to file of TPO for fresh adjudication – Teleper- formance Global Services (P.) Ltd. v. Assistant Commissioner of Income-tax – [2022] 137 taxmann.com 310 (Mumbai – Trib.)
Dispute resolution panel – Scope of direction :
Where Assessing Officer passed a final assessment order without incorporating directions of DRP in it and said order was merely a verba- tim repetition of draft assessment order, impugned order not being in conformity with provisions of section 144C was to be set aside – Olympus Medical Systems (P.) Ltd. v. ACIT – [2022] 137 taxmann.com 306 (Delhi – Trib.)
SECTION 92C OF THE INCOME-TAX ACT, 1961 – TRANSFER PRICING – COMPU- TATION OF ARM’S LENGTH PRICE
Comparables, functional similarity – Information technology enabled services (ITESs) : A company engaged in business of Medical Transcription and Translation services could not be considered as a comparable to appellant engaged in providing information technology enabled services and thus ought to excluded from list of Comparables – Morgan Stanley Advantage Services (P.) Ltd. v. Deputy Commissioner of Income-tax – [2021] 133 taxmann.com 488 (Mumbai – Trib.) Comparables, functional similarity – Information technology enabled services (ITESs) : Where assessee was providing information technolo- gy enabled services to its AEs, company engaged in rendering KPO services could not be rechar- acterized by TPO to make it compa- rable with that of assessee – Morgan Stanley Advantage Services (P.) Ltd. v. Deputy Com- missioner of Income-tax – [2021] 133 taxmann.com 488 (Mumbai – Trib.)
Methods for determination of – TNM method : TPO had to justify and document reasons for rejec- tion of five methods prescribed in rule 10B while selecting ‘other
method’ as most appropriate method – SABIC India (P.) Ltd. v. Deputy Commis- sioner of Income-tax – [2021] 133 taxmann.com 489 (Delhi – Trib.)
Adjustment – Working capital adjust- ment : Working capital adjustment was to be granted on actual basis without any cap or restriction – Deputy Commis- sioner of Income-tax v. Tenova Technol- ogies (P.) Ltd. – [2022] 137 taxmann.com 282 (Bangalore – Trib.) Adjustments – Marketing expenses : Where assessee company made payment towards marketing services fees expenses to its AE, however, TPO instead of benchmarking international transaction held that a payment made by assessee under another license agreement entered into by it with its AE already included such marketing fees, thus, there was duplication of services, TPO could not question whether service was duplicate in nature and its jurisdiction was only to benchmark transaction as per section 92C, thus, matter was to be remanded for doing same – L’Oreal India (P.) Ltd. v. ACIT, Mumbai – [2021] 133 taxmann.com 487 (Mumbai – Trib.)
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